the alternative dispute resolution section and the...

The Alternative Dispute Resolution Section And

The Arizona State University Center for Law, Science & Innovation

PRESENT

WHEN LAWYERS AND ENGINEERS COLLIDE – THE RESOLUTION OF TECHNICAL / SCIENTIFIC BASED DISPUTES

THURSDAY, MARCH 31, 2011, 2:00 – 4:00 pm

Great Hall

Arizona State University Sandra Day O’Connor College of Law Reception to follow

Technology / science based legal disputes present a number of unique complexities and impediments to settlement. Come hear our panel of technology and ADR experts identify and discuss strategies to overcome these barriers and move the parties to resolution. Topics include:

• The technical dispute - Why ADR and not a trial to the court • How to demystify the technical issues • Dueling experts and how to move forward • Getting through governmental and regulatory road blocks • Achieving consensus through public participation and facilitation

This forum is a must for litigators and neutrals, as well as intellectual property, environmental, eCommerce, biotechnology, energy, telecommunications, technology, transportation and construction lawyers

Program Material Index

Title Page Biographical Information of Program Panelists 2 PowerPoint Presentation Slides 10 Article -- Bulldozing Barriers to Patent-Case ADR Use, Robert F. Copple and Susan Halverson

22

Article – IAP2 Foundations of Public Participation 31 ADR Process Planning Worksheet 35 Forum Selection Matrix for IP Disputes 39

Program Materials

Copple & Associates, P.C.

Robert F. Copple 9274 /East Desert Trail Scottsdale, Arizona 85260 Tel: (480) 614-1561 Cell: (480) 694-3403 [email protected] www.Copplelaw.com

Robert F. Copple, J.D., Ph.D

Arbitrator / Mediator

Robert Copple is fully committed to Alternative Dispute Resolution (ADR) as a trained arbitrator, mediator, facilitator, advocate, teacher, and consultant who has been involved in hundreds of dispute resolution proceedings across the United States. His ADR appointments and professional activities include:

American Arbitration Association – National Arbitration and Mediation Panels

CPR International Institute for Dispute Prevention and Resolution o Distinguished Panel of Neutrals (General Commercial, Technology,

Biotechnology, Environmental, and eDiscovery Panels) o CPR International Commission on Patent Disputes – Chair o eDiscovery Committee – Drafted eDiscovery Guidelines o Arbitration Committee – Charged with revising CPR arbitration rules.

Arizona State Bar Association -- Executive Council, ADR Section

American Bar Association – ADR Section

Motorola, Inc. – Global ADR Coordinator (past)

The breadth of his subject matter dispute experience includes:

Intellectual Property (patent, copyright, trademark, trade secret)

Biotechnology / Healthcare / Bio Informatics

Environmental / Energy / Natural Resources

Information Technology / Telecommunications / Media / eCommerce

eDiscovery

Agency rulemaking and regulatory practice

Complex Commercial

Unfair Competition

Securities

Class Actions

Construction

Mass Tort

Program Materials

mailto:[email protected]

http://www.copplelaw.com/

Mr. Copple practiced as a litigator and regulatory negotiator with major law firms in Denver and Phoenix. Later, as Senior Litigation Counsel for Motorola, he was lead attorney for all environmental litigation, all litigation for the Semiconductor Sector, and the majority of the company’s intellectual property litigation. In addition, he reorganized and managed the company’s Superfund liability, developed risk management systems for the Iridium Satellite Launch Program, and led the eCommerce law team. As the Company’s Global ADR Coordinator, he developed ADR policy and incorporated decision science methods for litigation evaluation and strategy analysis.

Mr. Copple writes and speaks extensively on ADR, litigation practice, eDiscovery, intellectual property, biotechnology, communications law, data security, economics, and environmental topics and has authored more than 30 books and academic and professional articles. He is a lead editor and contributing author of Biotechnology and the Law, a treatise published by the American Bar Association. In addition, he is the Chair of the CPR International Commission on Patent Disputes and the primary author of CPR’s Patent Mediation Deskbook.

He has lectured and taught graduate and law school courses at The University of North Carolina at Chapel Hill, Arizona State University, the University of Nebraska, and the University of Houston Law Center, and has taught training seminars for the CPR, AAA, and the Arizona State Bar Association. Mr. Copple is the Chairman of the Advisory Board for the Arizona State University Center for Law, Science and Innovation and is a Research Fellow in the Center. He has been named as one of the 2007 -2011 "Best Lawyers in America" and the Phoenix Metro "Top Lawyers." Mr. Copple received his undergraduate, masters, and law degrees from the University of Nebraska, where he was the executive editor of the Nebraska Law Review, and his Ph.D. in Mass Communications from the University of North Carolina at Chapel Hill. He also clerked for a state Supreme Court chief justice and for a United States District judge. Prior to his legal career, Mr. Copple was a working journalist on several newspapers and a legislative aid in the U.S. Congress and the Nebraska Unicameral Legislature.

[RFCopple 7/15/10]

Program Materials

John D. Godec Godec, Randall & Associates Inc. 602.266.5556 [email protected]

John Godec is president of Godec, Randall & Associates Inc., a firm that consults, coaches and trains business and government in difficult, high stakes communication, public outrage, consensus building, crisis, conflict resolution and public involvement. He is an International Association of Facilitators (IAF) Certified Professional Facilitator©, one of the original developers of the International Association for Public Participation (IAP2) Certificate training course, a developer of the IAP2 Emotion, Outrage and Public Participation course with Dr. Peter Sandman, a former Vice-President for IAP2 and current Board Director of the IAP2-USA Affiliate.. Godec is a roster member of the U.S. Institute for Environmental Conflict Resolution, and helped develop a risk and emergency communication protocol for the National Governors Association.

Godec also trains professionals in news media relations and response, issue management and crisis prevention, preparation, response and recovery.

Godec has worked extensively in the U.S., Canada, Mexico, Europe, South Africa, Australia and Southeast Asia for Fortune 50 corporations, and local, state, federal and tribal governments and NGOs. He’s been involved with nearly 400 complex and frequently controversial public communication and environmental projects for mining, manufacturing, energy, healthcare and public works in a 30 year career. Issues ranged from landfill siting to pandemic health planning, mining public lands, energy and transportation corridor location, facility design and construction, industrial development, hazardous waste remediation, urban/regional/environmental planning, disaster response, environmental health and safety, and many others.

He’s been interviewed by NBC, CBS, ABC, and CNN in the U.S., CNN Europe, Canada’s CBC, the Wall Street Journal, New York and L.A. Times, Washington Post, and dozens of other national, regional and local print and broadcast media. He regularly speaks at events dealing with public outrage, public relationships and participation, sustainability, crisis, conflict, consensus, and issue management, and has lectured in the U.S. at Arizona State University, University of Arizona, Indiana University’s School of Public and Environmental Affairs, University of Texas, and in Australia at the Queensland University of Technology.

Godec is a former Director of Issues and Crisis Management for Motorola Corporation and past Communications Director for the Arizona Department of Environmental Quality.

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Kris Mayes is the Founding Faculty Director of the Program on Law and Sustainability at Arizona State University’s Sandra Day O’Connor College of Law and is a member of the faculty at ASU’s Global Institute of Sustainability. Mayes served as an Arizona Corporation Commissioner from 2003 to 2010, where she was also its Chairman for two years. During her tenure at the ACC, Mayes co-authored Arizona’s Renewable Energy Standard, and was a driving force behind the Commission’s adoption of one of the nation’s most ambitious Electric Energy Efficiency Standards. As a Commissioner, Mayes also focused on renewable energy transmission, water conservation and pipeline safety issues. Prior to her time at the Commission, Mayes served as former Arizona Governor Janet Napolitano’s communications director and was a general assignment reporter at the Phoenix Gazette and a political reporter at the Arizona Republic, where she covered the Arizona State Legislature and later the 2000 presidential campaigns of Sen. John McCain, former Vice President Dan Quayle, publisher Steve Forbes and then-Governor George W. Bush. She received her bachelor’s degree in political science and law degree from ASU and a Master of Public Administration from Columbia University in New York. Mayes is a native Arizonan, born and raised in Prescott.

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Michael Lang received his BA in Chemistry from the Michigan State University, his MS in Chemistry and MBA from Western Michigan University and his J.D., as well as his Ph.D. in Environmental Toxicology and Resource Development from Michigan State University. Dr. Lang practices intellectual property law with the Noblitt Group, in Scottsdale Arizona. Before returning to law school, Dr. Lang had a successful career in the marketing, product development, and sales of analytical instruments and data processing software for Varian Associates of Palo Alto, California. More recently, he has worked in the technology transfer office at Michigan State University and with the prestigious law firms of Harness Dickey in Michigan and Snell & Wilmer in Arizona. Dr. Lang serves as an Adjunct Professor at Michigan State University College of Law and is a registered patent attorney. His background includes broad-based intellectual property counseling, patent preparation and prosecution, trademark and copyright registration, trade secret and trade dress protection, technology transfer, and related contracts, licensing and counseling. Dr. Lang’s practice is concentrated on technology in a wide variety of disciplines including: chemistry; analytical instrumentation, mechanical engineering, biotechnology; medical devices; chemical engineering; genetic engineering; agriculture; plants; nutraceuticals; pharmaceuticals; and toxicology. In addition, Dr. Lang has assisted in intellectual property rights education, IP policy development, technology transfer and commercialization projects in developing countries.

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Ruth Franklin Alternative Dispute Resolution

Page 1

Ruth Franklin, PE, Esq. Biographical Information

Mediator Arbitrator Dispute Resolution Board Project Neutral Initial Fact Finder Facilitator

Summary Ruth Franklin’s ADR career encompasses over 20 years of experience working to resolve complex disputes. Ruth addresses the different stakeholder interests and specializes in creating unique ADR processes. Ruth serves as facilitator of early planning meetings and works with large groups during the program implementation phase in her role as the project neutral and initial fact finder. Ruth Franklin is pre-qualified with the California State Department of Transportation and the New Jersey Department of Transit Tunnel Project to serve as dispute resolution board member. Resolved Disputes Ruth Franklin has implemented unique ADR processes to resolve matters that involved municipalities, state and federal highway and road construction projects. Her expertise in resolving multi-stakeholder disputes in residential and commercial land developments is the natural extension of her career as a professional civil engineer. Construction Defect Taking the approach of facilitating informed decision-making, Ruth has worked to resolve a wide variety of construction defects such as: soil compaction and grading; paving; drainage; soil erosion; concrete floor systems; copper roofing; and electronic data cable installation. Experience Ruth has arbitrated and mediated throughout the western states with different public municipalities, Native American tribes, private developers, surety and insurance companies, design professionals, contractors and property owners to resolve multi-million dollar disputes. Ruth furthered her work designing ADR processes as a Senior Attorney to Intel Corporation where she created and managed the Worldwide Claims Management Group. This first of its kind internal dispute

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Page 2

resolution program identified, assessed, and resolved hundreds of multi-million dollar commercial disputes at the high-tech manufacturing facilities located throughout the United States of America as well as in Ireland, Israel, Malaysia, India, Philippines, and China. Ruth is the former Chair of the Executive Council of the Alternative Dispute Resolution Section of the Arizona State Bar Association and facilitates this group’s annual strategic planning program. An AV rated attorney with Martindale Hubbell Ruth is also certified as an international mediator with the International Mediation Institute in The Hague. Through her application of purposefully facilitative teaming techniques Ruth Franklin assists stakeholder groups with establishing creative resolution programs identifying and addressing concerns of key stakeholders, assisting the parties in building trust through effective communication, facilitating informed, mutually beneficial and transparent decisions, commitment to agreed upon timelines, establishing measurements of success along with feedback criteria for sustaining and continuously improving the program developed. Professional Affiliations Mediator for the Arizona State Attorney General’s Office, Division of Civil Rights; Executive Council member of the Association for Conflict Resolution Commercial Section; American Bar Association Section of Dispute Resolution and Forum on Construction Industry; State Bar of Arizona Alternative Dispute Resolution Section Chair 2009 – 2010, Executive Council member since 2008; State Bar of Arizona Construction Section Member since 2000; Commercial and Construction Mediator Panel Member of the American Arbitration Association since 1989. Teaching Faculty, How to Gain the Benefits of Alternative Dispute Resolution, 2010; Faculty, State Bar of Arizona, Private Arbitration Update: Fundamentals and Best Practices, 2007, 2008, 2009, 2010; Faculty, American Arbitration Association National Neutrals Conference, 2003 and 2008; Faculty, American Arbitration Association National Commercial Construction Arbitrator and Mediator Training, 1997 and 1998. Training Commercial Mortgage Mediation Program for the American Arbitration Association, January 2010; Dispute Resolution Board Processes for CALTRANS, November 2009; Association for Conflict Resolution, Advanced Commercial Mediator Institute Training IV, Neuroscience and

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Mediation, October 2009; Management and Leadership Development Training, Managing Through People, Intel Corporation, 2005; Human Behavior and Communication within Teams, Intel Corporation, 2005; Structured Problem Solving, Intel Corporation, 2004; Leading Effective Project Teams Using the Tuckman Model, Intel Corporation, 2004; American Arbitration Association Mediator Training, 1997. Publications Capitalizing on Allocated Risk, Arizona Construction Law Practice Manual, State Bar of Arizona, 1999, 2002, and 2011. Education B.S. Civil Engineering, San Diego State University 1982. Juris Doctor, University of San Diego College of Law 1989, Honors: San Diego Law Review. Contact Information Ruth Franklin 2030 W. Baseline Road, Suite 182-223 Phoenix, AZ 85041 (602)459-0323 [email protected]

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3/29/2011

1

WHEN LAWYERS AND ENGINEERS COLLIDE

THE RESOLUTION OF TECHNICAL AND SCIENTIFIC BASED DISPUTESAND SCIENTIFIC BASED DISPUTES

The Alternative Dispute Resolution Section of theState Bar of Arizona

AndThe Arizona State University Center for Law,

Science & Innovation

Agenda• Greetings and Overview

– Gary Marchant and Bob Copple

• Resolution Issues and Impediments in Specific Areas • Environmental -- Bob Copple• Intellectual Property – Michael LangIntellectual Property Michael Lang• Construction / Transportation – Ruth Franklin• Public Utilities – Kris Mayes• Governmental Parties and Regulators – John Godec

– Panel Discussion – Commonalities and Distinctions

• ADR Processes, Techniques and Solutions – Panel Discussion

• Pre Litigation Phase• Litigation Phase

• Reception Immediately Following the ProgramSlide 2

Resolution Issues and Impediments in Environmental Disputes

Scenario • Large Hazardous Waste Spill (CERCLA or OPA)• Multiple Potentially Responsible Parties• Multiple Federal and State Regulators• Legions of Experts For

– Each Party– Each Regulator– Each Effected Medium (i.e., Air, Water, Soil)

• Direct Impact on Public and Public Resources• Numerous Related and Conflicting Actions and

Claims

Slide 3

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2

The Whack-A-Mole World of Environmental Disputes…

Conflicting Cleanup

Standards

RelatedFederalState

Actions

Citizen Suits

PRPs&

Regulators

Inter PRPClaims

InsuranceCoverageLitigation

Legions ofCompeting

Experts

PrivatePersonal &Economic

InjuryClaims

Political Pressure

Technical and Scientific Complexity• Trustee Experts, Agency Experts, RP Shadow

Experts, RP Testifying Experts, etc.

• Studying Complex Environmental Systems

• Using Wide Variety of Methods from Direct to Ethereal

• All Looking at Broad Questions of Injury, Restoration and Compensation

• Results in a Wide Range of Conclusions and Opinions

Slide 5

Types of Intellectual Property (“IP”)

• Trade secrets• Copyright• Trademarks/Domain names• Trademarks/Domain names• Patents• Licenses

© Michael J. Lang 2011 Slide 6 [email protected]

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ADR Advantages/Disadvantages for IP Disputes

• Advantages in general– Cost– Speed – Finality of decisionFinality of decision– Control of trade secrets and company records– Knowledge/control of Arbitrator(s)– Discovery unknown to other potential

infringers– Basis of decision unknown to other potential

infringers– Can settle by agreement and/or license– Bridging multi-national disputes (WIPO)


ADR Advantages/Disadvantages for IP Disputes

• Disadvantages in general– Both sides must agree to ADR– No appeal; has no precedent– No special damagesNo special damages– No injunctions– No attorneys’ fees– Surrender Federal Jurisdiction– No holding of IP to be valid and enforceable– Knowledge/control of Arbitrator(s)– Enforcing ADR decision or settlement agreement– Litigating the issue may be the outcome


U.S. Patents • Most IP attorneys advise against ADR for patent infringement• Establishment of “Rocket Dockets”• Trade secrets safe & limited PR• Limited discovery• No Markman hearing; Arbitrator(s) interpret(s) patent claimsg; ( ) p ( ) p• No juries• No appeal to Fed Cir. (about 50% reversal rate)• Δ losses claims for: rule 11; abuse judicial sys; malicious

prosecution; inequitable conduct • Π losses claims for: willful infringement; injunctive relief; special

damages; and a holding of valid and enforceable• Settlement agreements on courthouse steps


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Construction• Complexity:

– Number of decision makers– Diversity in professions

N b f l ti– Number of solutions

• Science may not be well understood by advocates and some decision makers

• Differing standards for establishing responsibility– Customary rather than empirical

Slide 10

Transportation

• Political and Governmental Influences– Budgetary Constraints

• Scientific ConsensusScientific Consensus• Large numbers of potential

stakeholders– Difficult to identify– Shifting desire to engage over multiple

years

Slide 11

To Settle or Not to Settle: To Settle or Not to Settle: Impediments to MultiImpediments to Multi--Party Party

Resolution of Utility Resolution of Utility RatecasesRatecasesand Other Matters Involving and Other Matters Involving

Public UtilitiesPublic UtilitiesPublic UtilitiesPublic Utilities

Kris MayesDirector, Program on Law and

Sustainability at the ASU Sandra Day O’Connor College of Law

Slide 12

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Utilities and Settlement• It starts with the constitution: Arizona is one of the

only states in the nation in which the public utility commission (ACC) is a branch of the government (Article 15).– Constitution and case law establish a strong

preference for stringent review of utility filings and applications for rate increasesapplications for rate increases.

– Additionally, Arizona is one of the few states where Commissioners are elected, meaning that the Commissioners feel a special obligation to their constituents to vet cases, and to do so in a way that demonstrates thoroughness.

– For Commissions, their Staff, and even the utilities, this has almost universally been accomplished through a fully litigated rate case, pre-hearing data requests (sometimes in the thousands), pre-filed testimony and the use of expert witnesses.

Slide 13

Utilities and Settlement• Settlement agreements are often eschewed by Commissioners can be a general feeling of abdication of duties.

• SA’s also not encouraged in the past by Staff for similar reasons.– Staff members of PUCs are motivated by working in the

public interest; most view their jobs as watchdogs for the public, working to ensure that every angle has been thoroughly analyzed before sending a case to the Commissioners for their approvalCommissioners for their approval.

• From the utilities’ standpoint, Settlements can cut both ways.– They can take less time, leading to ratecase expense

savings (fewer attorneys fees, expert witnesses required), and limiting the regulatory lag that can cut into revenues and earnings.

– But Settlements can involve giving up a lot, in particular if multiple parties are in the room demanding specific concessions (environmental clean-up, renewable energy advancement, etc.)

Slide 14

Utilities and Settlement• Advantages of Settlements in the Age of New

Energy:– Offers an opportunity for a growing set of

stakeholders (solar developers, installers, energy efficiency companiesenergy efficiency companies, environmentalists, merchant gas generators, etc) to be involved in the process in a way that almost ensures their issues will be addressed by utilities and the Commission.

Slide 15

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Utilities and Settlement• How to make it happen?

– Commissions and utilities that have little to no experience with Settlements need to get one or two under their beltsget one or two under their belts.

– Utilities could be encouraged by the Commission, to propose a Settlement in the first instance, especially in complex cases that will draw in multiple Parties/Intervenors.

– Some cases will never be appropriate for Settlement.

Slide 16

Government Inertia and ADR / Settlement Paralysis

Virtually All Agencies Operate Under a Direct or Indirect Mandate to Use ADR, But the Process Often Discourages Actual Application:

• Perceived Need to Adhere to Policy and Check All of the Regulatory BoxesRegulatory Boxes

• Precedent -- Develop, Bolster, Protect

• Inter Agency Bureaucracy & Conflicts

• Political Pressure -- Lawmakers, Constituents & Interest Groups

• All of Which May Conflict with Public Interest in Expedited Cleanup and Resource Restoration

Slide 17

Government ADR Proclamations and Limitations

APA 5 USC 572• General authority• (a) An agency may use a dispute resolution proceeding for the resolution of an issue in

controversy that relates to an administrative program, if the parties agree to such proceeding.

• (b) An agency shall consider not using a dispute resolution proceeding if--• (1) a definitive or authoritative resolution of the matter is required for precedential value,

and such a proceeding is not likely to be accepted generally as an authoritative precedent;and such a proceeding is not likely to be accepted generally as an authoritative precedent;• (2) the matter involves or may bear upon significant questions of Government policy that

require additional procedures before a final resolution may be made, and such a proceeding would not likely serve to develop a recommended policy for the agency;

• (3) maintaining established policies is of special importance, so that variations among individual decisions are not increased and such a proceeding would not likely reach consistent results among individual decisions;

• (4) the matter significantly affects persons or organizations who are not parties to the proceeding;

• (5) a full public record of the proceeding is important, and a dispute resolution proceeding cannot provide such a record; and

• (6) the agency must maintain continuing jurisdiction over the matter with authority to alter the disposition of the matter in the light of changed circumstances, and a dispute resolution proceeding would interfere with the agency's fulfilling that requirement.

• (c) Alternative means of dispute resolution authorized under this subchapter are voluntary procedures which supplement rather than limit other available agency dispute resolution techniques.

Slide 18

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Public Participation

Public sentiment is everything. With public sentiment, nothing can fail; without it nothing can succeedwithout it nothing can succeed.

- Abraham Lincoln

Slide 19


I do not represent public opinion: I represent the public. There is a wide difference between the realdifference … between the real interests of the public and the public’s opinion of those interests. I must represent … real interests of the whole people.

- Theodore RooseveltSlide 20


Slide 21

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The End of Nuclear Power?

• Fukushima Daiichi Nuclear Complex

• 104 Operating Plants in the U S• 104 Operating Plants in the U.S. –many near population centers and fault lines

• USNRC Poised to Approve 20 New Reactors

Slide 22

Even if the risk of catastrophe is tiny, “the worst-case scenario is so dreadful as to be unthinkable.”as to be unthinkable.

- The Week- The Washington Post

Slide 23

Energy Source Risks

• Oil Rigs Blow Up and Spill• Coal Mines Collapse and Kill Miners• Wind Mills & Solar Panels Consume• Wind Mills & Solar Panels Consume

Massive Land Mass• NIMBY

Slide 24

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Energy Source Risks

Fossil Fuel Emissions Kill 2-million people annually - far more than “all nuclear incidents worldwide,” includingnuclear incidents worldwide, including Chernobyl.

- Chicago TribuneSlide 25

Public ParticipationImpediments/Chronic Conflict

• Loss of trust and credibility• People stop listening to each other• Blame the adversary• Blame the adversary• Fixed and simple convictions are

displayed• Questions become rhetorical

Slide 26

ADR Processes:Transportation

• ADR Early and Often– Public engagement with science

before planning through completionbefore planning through completion• Mediators and Facilitators involved

from the start– Facilitated partnering during

installation– Dispute Resolution Boards before

completionSlide 27

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ADR Solutions: Transportation

• Facilitate scientists working collaboratively

Elemental building blocks of the– Elemental building blocks of the solution

• Mediate the emotional components

• Creative use of peer reviews

Slide 28

ADR Solutions:Construction

• Building knowledge in the ADR professional

• Reframing the issues to best addressReframing the issues to best address what the parties really want

• 80/20 Certainty and Informed Decision Making:– Identify known variables, ranges– Envelop of reasonableness

Slide 29

ADR Processes:Construction

• Blended ADR Programs:– Facilitate to keep communications

openopen– Neutral Fact finders– Mediate – Arbitrate

• Combinations

Slide 30

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Public ParticipationSome Solutions

• Risk communication -- a two-way exchange of information about threats and consequencesq– Enhances knowledge and understanding,

builds trust and credibility, encourages dialogue, and influences attitudes, decisions, and behavior

• Move people from positions to interests

Slide 31

IP example: Domain Names• Hypo: A party is using your Registered

Trademark of DRINK ONE as domain names www.drinkone.com and www drink1 com what can you do?www.drink1.com, what can you do?

• Anticybersquatting Consumer Protection Act (ACPA) 15 USC §1125(d)

• Uniform Domain-Name Dispute Resolution Policy (UDRP) ICANN agreement w Registrar


IP example: Domain Names

• ACPA– Federal Jurisdiction– Actual damages or statutory damagesActual damages or statutory damages– Can collect attorneys’ fees– Injunction to transfer domain name outside

US – Transfer of domain name to trademark

owner– Expensive and long timeline


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IP example: Domain Names• UDRP

– Fast (about 2 months)– Cheap ($1500 for 1 name; 1 panelist)– Domain name locked by registrar upon notice– Domain name locked by registrar upon notice – No discovery or hearings; supplement @ panel

discretion– No damages or attorneys’ fees– Only remedy: cancellation or transfer of domain

name– Decisions: available to public; have no precedent – Can be appealed; Jurisdiction: where registrar is

located


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C:\DOCUMENTS AND SETTINGS\RCOPPLE\DESKTOP\PATENT ADR 1.DOC

Bulldozing Barriers to Patent-Case ADR Use*

By

Robert F. Copple Susan Halverson

Controlling patent litigation costs is one of the toughest and most important challenges

presently facing corporate general counsel. Intellectual property based companies often spend

60% to 90% of their total litigation budget on patent disputes. And, the cost of playing this game

continues to grow. With vast fortunes at stake and the potential to achieve decisive competitive

advantages, patent litigation has become the sport of kings. In this age of outsourcing and off-

shore manufacturing, intellectual property is one more piece that multinational corporations

move around the Monopoly board. There are a number of reasons why patent litigation has

become so expensive, as well as a number of ways that general counsel can manage and reduce

these costs. In this article, we are looking at only one of the potential solutions – the strategic

use of Alternative Dispute Resolution (ADR) techniques to reduce the costs and disruptions of

patent litigation, as well as to avoid prolonged periods of business uncertainty and stock market

angst.

Patent litigation presents a special case for ADR application. The CPR Institute for

Dispute Resolution has established a blue ribbon Patent Commission made up of corporate

intellectual property experts to study how ADR techniques can be fine-tuned to better address the

legal and business peculiarities of patent disputes. Our work began with the observation that

ADR is grossly underutilized in the intellectual property arena and, when used, often arises late

in the process after significant costs have already been incurred.

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C:\DOCUMENTS AND SETTINGS\RCOPPLE\DESKTOP\PATENT ADR 1.DOC 2

There are a number of reasons, legitimate or otherwise, why ADR is often ignored or

rejected as a way to resolve patent disputes. One often heard explanation is that the subject

matter of patents disputes is “technical.” Because of this complexity, there is little chance the

dispute can be adequately resolved by a neutral (mediator or arbitrator) who doesn’t possess the

same level of technical sophistication as the parties. The “technical” excuse is an outgrowth of

the engineering mindset that reveres the ability to grasp the smallest nuances and provide the

most elegant technical solution. As a result, there is a tendency for engineering or tech based

companies to treat patent disputes as a right brain “I’m smarter than you” competition as

opposed to looking at the problem in the vast area of gray that defines the business and legal

perspectives.

While engineering approach is exactly the skill set necessary for invention, it is a disaster

for dispute resolution. If not kept in check, an exclusive focus on “who is right” engineering

arguments is a complete nonstarter for arbitration and can easily derail a mediation that has the

potential for a mutually beneficial business resolution based on future business or pricing. We

have both been part mediations where savvy corporate representatives, knowing the single-

minded attachment and focus of the technical members of the team, have requested that

negotiations take place only through the business representatives in order to avoid bogging down

in the minutia and arguments about who has the smartest engineers. What must be remembered

is that, at the end of the day, if a patent dispute goes to trial before a jury, the majority of the

elegant engineering arguments will be lost and never become a part of the final decision making

process. As they say, this is how sausage is made. At the end of the day, all stakeholders,

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including the technical team, will likely be better off addressing their dispute in an ADR forum

where they control the process rather than casting that dispute to the vagaries of the trial court.

Another concern about patent ADR, and particularly arbitration, is that the arbitrator will

simply get it wrong and the parties will not have recourse to a judicial appeal. Even worse, is the

situation where an arbitrator may recommend a permanent injunction forbidding one party to

continue to use the technology at issue, again without appeal. What is often forgotten is that

arbitration is a private proceeding designed by, agreed to, and implemented by the parties in

dispute. It is the parties, not the ADR neutral, who control the arbitration process and the form

and type of remedy. As a result, the parties by agreement can dictate the types of available

remedies and the scope of damages that may be awarded. For example, the parties can agree that

the arbitrator is not authorized to impose an injunction. Further, to avoid the run-away damage

award, the parties can agree to a high/low damage award range, or other damage control

formulas, that guarantee the plaintiff certain minimum damages for entering into the arbitration

but would limit any pay out by the defendant to a set ceiling.

Patent dispute arbitration also brings up the argument that arbitration is at least as

expensive as a full blown trial to the court. Again, this problem is one where the solution lies

firmly in the hands of the parties. Granted, the professional and economic motivations of some

outside counsel may be to leave no stone unturned, no document unreviewed, and no deposition

untaken, However, he parties to dispute, and particularly in-house counsel, can eliminate and/or

reduce many of these typical litigation costs by taking a firm hand and agreeing between

themselves to limit discovery, the number of experts, the issues to be resolved, and the duration

of the arbitration. Because of the sometimes conflicting motivations between outside counsel

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and the corporate representatives, it may, at times, very well be best for the parties themselves,

without outside counsel, to meet and discuss how an arbitration can be streamlined.

But, perhaps the most difficult barrier to achieving resolution of a patent dispute in

mediation or in arbitration is failing to fully understanding the financial complexity and

competitive ramifications of a patent settlement or arbitration judgment. Most commercial

litigation can and is resolved through the payment of a sum certain which is then incorporated

into the balance sheets of the disputing companies and forgotten. It is more difficult, however, to

quantify the value of a patent and its impact on future competition. That is, patent settlements

and judgments often take the form of royalty fee per each use of the intellectual property. Past

infringing use of intellectual property can be calculated with some degree of accuracy. The

uncertainty lies in attempting to estimate the number of times the intellectual property will be

used in the future, i.e., a thousand product units or a million product units. In addition, the risk

for the settling party having to pay the royalty may be whether its future use of the intellectual

property will be in a low-price product or a small part of a high-price product. Therefore, if the

royalty is based on a set fee per use, the subsequent license may cause a future low-price product

to be too expensive to manufacture and sell.

The financial complexities are not an insurmountable barrier to resolution of such

disputes. Rather, what is important is that in-house counsel and other corporate decision makers

understand these financial complexities and integrate the corporate strategy people into the early

stages of a patent dispute and its resolution. To put it another way, the purchase or sale of a

patent license, even as a result of ADR, is not totally dissimilar from the sale or acquisition of

another business. Therefore, it is only natural that the strategy expert should be engaged to help

quantify the risks and benefits of any such decision. With this kind of upfront preparation, ADR

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can be successful in dramatically reducing the transactional costs associated with patent dispute,

as well as, often, leading to a more reasonable result between the parties. Indeed, we have both

been involved in numerous patent mediations where the resulting settlement, in reality, was

equal to 3% to 10% of the litigation demand. Likewise, we have seen ADR settlements where,

as a result of changing technology and markets, what appeared to be a very large and successful

settlement based on future royalties or discount deals on products, turned out to be of little future

use and profit.

Thus, because of the complexity regarding the ownership of IP and its impact on a

business, the flexibility of a strategic and tailored ADR processes, as opposed to the more firmly

set trial process, is much more easily adapted to address these business issues. For example, it is

important to remember that most patent cases do not stand alone. That is, they are often part of

ongoing licensing programs through which an inventor is systematically attempting to negotiate

licenses with all of the manufacturers and users of the invention in a particular industry segment,

i.e., all semiconductor manufacturers who use the same piece of equipment or make the same

type of microchip. Successful licensing programs are built upon a series of licensing

negotiations enforced by litigation or the threat of litigation. However, patent litigation can

present a threat to a licensing program. The litigation of patent disputes is not a zero sum game

that results in the plaintiff either getting a huge judgment or nothing. On the contrary,

defendants will typically challenge the validity of the plaintiff’s patents. If the patents are

proven to be invalid as to that defendant, they are invalid as to the rest of the world, which means

the end of the licensing program. Given these dangers, the plaintiff in a patent dispute could

very well benefit from asserting a risky patent in a private arbitration where the result would be

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confidential, would not have binding precedential effect, and, by agreement, the decision of the

arbitrator could be limited to a simple statement of win or lose without substantive explanation.

Finally, because of the global reach and applicability of intellectual property, there is a

well-founded concern about whether governments and courts in parts of the world have the

motivation or ability to protect the intellectual property rights of non citizen corporations. Even

if there is a legal system to protect intellectual property rights, the prolonged time to trial and

judgment in many countries may not address the infringement until well after the competitive

damage is done or the infringer has become judgment proof. In fact, such concerns about China

and several other Asian nations are significant deterrents to foreign investment in those growth

economies. Here again, the use of ADR might provide parties with more assurance of a fair

evaluation and decision. One way to proactively address these concerns is by including

mandatory ADR clauses in foundry agreements (where the inventor contracts with the

manufacturer to produce the goods that will be branded and sold by the inventor). Therefore, if

the foreign manufacturer uses the inventor’s intellectual property for its own purposes, the

infringement can be addressed in private arbitration rather than in the foreign courts. In addition,

assuming the adequacy of personal jurisdiction over the manufacturer under the contract, this

method creates an additional contract cause of action against the manufacturer in the United

States even though the actual infringement may fall outside of the jurisdiction of U.S. courts.

Where there is no privity of contract between the inventor and the infringer, the trick is

developing the leverage to motivate the infringer into arbitration. In either of the scenarios

above, the ultimate issue will be assuring that the arbitration judgment will be enforceable either

in the foreign jurisdiction or in the United States. With strategic planning, ADR presents the

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potential to side step the uncertainty of foreign courts and to enforce and protect intellectual

property rights.

Based on the above discussion, there are a few guidelines we can for effectively using

ADR to reduce patent litigation costs and risks:

• At the inception of business relationships, do what you can to lock ADR requirements

into contracts with business partners who are in a position to potentially infringe your

intellectual property.

• Every patent dispute has two major components: liability and damages. Throughout the

dispute process, give at least as much attention to the analysis of potential damages and

business impact as you do to liability. The reality is that the liability issues are more

subjective and the technical part of the team can argue about them all day. Damages,

however, are the real deal and much more suitable for early evaluation and handicapping.

Understanding the damages exposure will better enable you to weigh the alternatives and

the potential use of ADR.

• At first notice of the patent dispute before litigation has commenced, take a hard look at

exposure, impact, and costs, and consider the potential for an early mediation. The

dispute research clearly confirms our own experiences that the longer a dispute goes on,

the more the parties’ positions crystallize, and the more the damage claims escalate. Too

often, in-house patent attorneys do not take these initial notices seriously and miss the

opportunity to resolve a dispute for a small fraction of what the claim will grow into at

trial.

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• Once litigation commences, it is important to develop parallel strategies. That is, treat

every litigation as if you fully intend to go through trail. At the same time, it is important

to step back and determine how you can direct and leverage the into ADR .

• If the opposing side agrees to arbitration, take the time to create an agreement that limits

the arbitration to only the issues that actually need to be decided, limits discovery to only

what is necessary to try those issues, and carefully prescribes the arbitrator’s authority

and form of decision.

• If the parties agree to mediation, carefully select a negotiations team that has the

expertise and authority necessary to resolve the case. Be ready to make a thoughtful and

well-organized opening presentation presenting your best legal, technical, and business

arguments. Although some neutrals will disagree about the value of opening

presentations, the importance of such presentations is that often this is the first time the

opposing party has heard opposing position other than through the filter of its own

counsel. Then, be ready to put the technical liability arguments to the side in order to try

and come to a business resolution. Focus on resolution, not on who’s right.

• Finally, some parties, after spending millions of dollars on litigation costs, will then try to

save a few bucks and choose their neutrals by price. This approach is simply foolish.

The neutral fees will be insignificant compared to the litigation costs. Get the neutral

who can best do the job.

Patent litigation costs can be controlled. However, to do so takes strong and knowledgeable

corporate managers who are willing to made decisions and to take informed risks, and outside

counsel who, in the best interests of their clients, can help guide them through this process. The

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penalty for failing to act can be grossly expensive and protracted litigation outside the control of

the corporate decision makers with the potential to result in a business disaster.

*Reprinted with permission from the April 11, 2005 edition of the National Law Journal © 2005 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited. For information, contact 877-257-3382, [email protected] or visit www.almreprints.com.

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mailto:[email protected]

http://www.almreprints.com/

IAP2 13762 Colorado Blvd.

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phone 1-800-644-4273 in North America

303-254-5642 from outside North America

fax 303-255-2382

email [email protected]

web www.iap2.org

The International Association for Public Participation (IAP2) is the recognized global authority on tools and best practices for people who develop and conduct public participation processes.

IAP2’s Core Values describe the expectations of citizens in democracies who participate in public decision-making processes. Decisions that integrate these core values have proven to be the most successful, respected, and sustainable.

IAP2’s Code of Ethics reflect the integrity and legitimacy of the public participation process.

IAP2’s Spectrum of Public Participation demonstrates the varying levels of participation, depending on the goals, time frames, resources and levels of public concern or interest in the decision. Most importantly, each participation level involves a promise to the public, that If not defined, or understood clearly by both participants and decision makers, will result in dissatisfaction and/or disillusionment. At all public participation levels, promises should be clear — and promises should be kept.

These are the foundations of effective public participation. While they are copyrighted by IAP2, we encourage you to adopt and incorporate these principles into your processes. With proper attribution, we also encourage you to reproduce these documents for use in your own processes.

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© 2007 International Association for Public Participation

International Association for Public Participation | www.iap2.org

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As an international leader in public participation, IAP2 has developed the IAP2 Core Values for the Practice of Public Participation for use in developing and implementing public participation processes.

These core values were developed over several years with broad international input to identify those aspects of public participation that cross national, cultural and religious boundaries. These core values are designed to help make better decisions which reflect the interests and concerns of potentially affected people and entities. The IAP2 Core Values undergo regular review and renewal to ensure their relevance.

I A P 2 F o u n d A t I o n s o F P u b l I c P A r t I c I P A t I o n

IAP2 Core Values for the Practice of Public Participation

IAP2 Core Values

1. Public participation is based on the belief that those

who are affected by a decision have a right to be

involved in the decision-making process.

2. Public participation includes the promise that the

public’s contribution will influence the decision.

3. Public participation promotes sustainable decisions

by recognizing and communicating the needs

and interests of all participants, including decision

makers.

4. Public participation seeks out and facilitates the

involvement of those potentially affected by or

interested in a decision.

5. Public participation seeks input from participants in

designing how they participate.

6. Public participation provides participants with the

information they need to participate in a meaningful

way.

7. Public participation communicates to participants

how their input affected the decision.

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1. Purpose. We support public participation as a process to make better decisions that incorporate the interests and concerns of all affected stakeholders and meet the needs of the decision-making body.

2. Role of Practitioner. We will enhance the public’s participation in the decision-making process and assist decision-makers in being responsive to the public’s concerns and suggestions.

3. Trust. We will undertake and encourage actions that build trust and credibility for the process and among all the participants.

4. Defining the Public’s Role. We will carefully consider and accurately portray the public’s role in the decision-making process.

5. Openness. We will encourage the disclosure of all information relevant to the public’s understanding and evaluation of a decision.

6. Access to the Process. We will ensure that stakeholders have fair and equal access to the public participation process and the opportunity to influence decisions.

7. Respect for Communities. We will avoid strategies that risk polarizing community interest or that appear to “divide and conquer.”

8. Advocacy. We will advocate for the public participation process and will not advocate for a particular interest, party or project outcome.

9. Commitments. We ensure that all commitments made to the public, including those made by the decision maker, are made in good faith.

10. Support of the Practice. We will mentor new practitioners in the field and educate the decision makers and the public about the value and use of public participation.

The IAP2 Code of Ethics for Public Participation Practitioners supports and reflects IAP2 Core Values for the Practice of Public Participation. The IAP2 Core Values define the expectations and aspirations of the public participation process. The IAP2 Code of Ethics addresses the actions of practitioners.

IAP2 recognizes the critical importance of ethics to guide the actions of those who advocate public decision-making processes. To fully discharge our duties as public participation practitioners, we define terms used explicitly throughout our code of ethics.

Stakeholders are any individual, group of individuals, organization or political entity with interest in the outcome of a decision. The public are those stakeholders who are not typically part of the decision-making entity or entities. Public participation is any process that involves citizens in problem-solving or decision-making and uses public input to make better decisions.

The IAP2 Code of Ethics are principles that support the integrity of the public participation process. As practitioners we hold ourselves accountable to these principles and strive to hold all participants to the same standards.

IAP2 Code of Ethics

I A P 2 F o u n d A t I o n s o F P u b l I c P A r t I c I P A t I o n

for Public ParticipationIAP2 Code of Ethics

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F o u n d A t I o n s o F P u b l I c P A r t I c I P A t I o n

of Public ParticipationIAP2 Spectrum

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ADR Process Planning Work Sheet

Page 1 of 4

Ruth Franklin © 2011 All Rights Reserved Printed with Permission by the State Bar of Arizona

ADR Process Planning Work Sheet 1. What are the objectives of the resolution process? Include both your client’s business objectives as well as the legal objectives.

2. What is the history of the dispute – how did we get here?

3. What have been the impediments to resolution?

4. What is needed for a change in position?

5. Are there any time constraints?

6. Are there any continuing business relationship, individual personality or cultural issues to be addressed?

7. Are there any cost/budget constraints?

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Page 2 of 4

Ruth Franklin © 2011 All Rights Reserved Printed with Permission by the State Bar of Arizona

8. What type of ADR might be effective for this matter, based on the objectives identified?

Mediation – Facilitated conciliation or negotiations Consider mediating the scope of the arbitration, or any other specific issue that has been an impediment to resolution, like documentation to be exchanged

Arbitration – Enforceable ruling or award after presentation of evidence Consider limitations like a ceiling and floor on the award amount, or limiting remedy types

Fact Finding Panel (Substitute Decision Maker): Panel is presented information, issue by issue and is provides advisory opinions that guide resolution negotiations between the parties

Mock Trial or Arguments (Role Play Strengths and Weaknesses): Present evidence in a summarized format and seek advisory opinion from a trier of fact that is retained privately, or from internal group evaluating the exposure; trial is usually presented by only one side of the dispute with role playing for the opposition.

Consider combinations of ADR: Mediation after the conclusion of the presentation of evidence, and before the award; Mock trial /arguments and then mediate; Fact finding then mediate.

Details of the Process: 9. What type of factual exchange is needed to be successful evaluating the matter? (Documents, witnesses, records, etc)

10. Are there any limitations to the timing or scope of documentation exchange that might be negotiated like: Initial exchange to include only those documents that are going to be relied upon during the hearing, then specific identified documents can be requested? Do the institutional rules support the level of document exchange, or will this be negotiated between the parties? What process might help if the parties cannot agree? Could the neutral play a role here?

11. Is there anything that can be decided before the hearing that could shorten the process?

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Page 3 of 4 Ruth Franklin © 2011 All Rights Reserved Printed with Permission by the State Bar of Arizona

12. How many arbitrators might be used: one, three?

13. How is the arbitrator or mediator going to be selected? What skills, experience and background might be needed in the neutral?

14. What details are needed in the award? Consider factual findings, or a detailed explanation of the reasoning behind the award?

15. What law is going to apply to the dispute?

16. Where is the hearing going to be?

17. Where is the award going to be enforced?

18. What language will be used in the hearings?

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Page 4 of 4 Ruth Franklin © 2011 All Rights Reserved Printed with Permission by the State Bar of Arizona

19. What key institutional rules or processes will be used? Are there any rules used by the institution that might need to be amended to address the issues or objectives of this dispute? What if the parties can not agree with any amendment? Can the neutral play a role in resolving that type of dispute?

20. How are the disputes that might arise during the process to be resolved? Court system? Mediation? Arbitrator?

21. Are there any time or cost savings agreements that can be negotiated like: Presentation of evidence through affidavit or sworn statements with live testimony reserved for cross examination; Consent to judgment; Elimination of review/appeal?

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of 3 Ruth Franklin © 2011 All Rights Reserved Printed with Permission by the State Bar of Arizona

Forum Selection Matrix for IP Disputes There is no one forum where every potential resolution option or remedy is available. This matrix helps focus on which forum is the best fit for the outcomes sought.

FORUM

Outcome Litigation Mediation Arbitration

Cross License NO YES NO (unless written into the arbitration agreement)

Covenants not to sue

NO YES NO (unless written into the arbitration agreement)

Cease Interferences and Oppositions


Product Based Field of Use Licenses based on negotiated interpretation of Patent Claims


Claim Construction YES NO YES - Public YES NO NO - Without Publicity NO YES YES First Inventor Recognized YES YES YES

Royalties & Damages Reasonableness Determination YES YES YES Lost Profits YES YES YES Negotiated by parties - Set offs - Payment schedule

NO YES NO

Patent Pooling NO YES NO Binding on non-parties YES NO NO

Competitive Peace -Future Products -Future Application

NO YES NO

Preliminary Relief such as injunctive relief

YES NO YES

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FORUM

Outcome Litigation Mediation Arbitration

Interim Relief like seizure of goods or property search from a third party

YES NO NO

Procedural Concerns

Legal Precedent YES NO NO

Multi-country Enforcement of award/order/verdict

Not always available

NO Awards are more easily enforced in several countries, if they are participants in the New York Convention of 1958.

Appeal YES NO NO (unless written into the arbitration agreement)

Timing 3 years + Appeal = 5 years

1 year 2 years

Discovery YES NO YES, but Arbitral body rules control discovery, so modify as needed to balance the need for information against the cost and time.

Financial Concerns

Costs and fees (rough order of magnitude)

$3 -$5 million $600,000 $2 million

International Multi-country Dispute Costs and fees (rough order of magnitude)

$6 -$7 million $1.2 million $3 million

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Tips for Combining Forums Mediate to Set Outcomes for Arbitration

Claim Construction Definitions • Set parameters for arbitration to reduce time and cost • This dispute only

Baseball Arbitration of Claims and Definitions • Each side submits in each category • Expert arbitration picks after 1 day of testimony • Encourages reasonableness with less cost

Agreed damages formula dependent on claim constructions

• Waiver of injunctive relief if formula agreed

Arbitrate infringement Arbitration, Pause to Mediate

Timing • Mediation occurs 1 day after evidence is submitted • Opinion to issue within 30-day if no agreed resolution through mediation

Effectiveness

• Need uncertainty of outcome • Realistic signals from arbitration panel • Is there some gating determination needed to negotiate resolution? Like: Is claim construction necessary to create negotiation realism?

Tips on selecting an IP Mediator or Arbitrator – Qualifications to consider while participating in a joint interview which includes the other parties:

Patent Procedure and Case Law

Licensing Procedure and Practice

Familiarity with Industry Practice

Expert in Science Area on Panel or Advisor

Attributes like: Fairness, Language capabilities, or Deal Closer

Availability

Do not discuss the subject matter of the dispute – get joint agreement on how the matter will

be generally described to the mediator, and then no one is to elaborate.

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