Seminar on Intellectual Property and Creative Small and Medium-Sized Enterprises in the Digital...

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Seminar on Intellectual Property and Creative Small and Medium-Sized Enterprises in the Digital Environment May 20 to 22, 2008

Arbitration, Mediation and Expert Determination

Time- & Cost-Efficient Dispute Resolution Tools

Eun-Joo MINArbitration and Mediation Center

World Intellectual Property Organization

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WIPO Arbitration and Mediation Center

• Time & cost efficient resolution of IP and technology disputes, between private parties, away from court

• Established in 1994 as part of WIPO

• Procedures

Mediation

(Expedited) Arbitration

Expert Determination

Combined procedures

Specialized Procedure: Domain Name Dispute Resolution

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Trends in IP Disputes (1)

• Internationalization of creation and use of IP rights & globalization of markets; need for cross-border solutions for disputes

Accommodate different languages, cultures, (geographically limited) laws Avoid litigation in several jurisdiction (cost; risk of contradictory results – Angiotech patent 2007) Avoid home-court advantage Need for cross-border injunctions

• Growth of complex long-term relationships; strategic alliances; need to co-exist

Licensing, cross-licensing, patent pooling, standards

Need for mechanisms that preserve relations

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Trends in IP Disputes (2)

• Increasingly technical and specialized nature of IP Need for specific expertise of “neutral”

• Closely guarded relationships: confidentiality

• Highly competitive areas; Short product and market cycles Need for time-efficient procedures

• Dispute resolution as business decision

Routine IP litigation on a multi-country front complex, uncertain, protracted, expensive

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Preferred Processes for Resolving Cross-Border Disputes

(Source: www.pwc.com/arbitrationstudy) (2006)

Arbitration incombination with

other ADR processes44%

Arbitration only29%

Mediation and Other ADR processes

16%

Litigation only11%

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Mediation, Arbitration, Expert Determination

• Mediation A non-binding procedure in which a neutral intermediary, the mediator, assists

the parties in reaching a settlement of a dispute.

• Arbitration A procedure in which the dispute is submitted to one or more arbitrators who

make a binding decision on the dispute.

• Expert determination A procedure in which a dispute/difference (frequently discrete issues of

technical, scientific or related business nature) is submitted to one or more experts who make a determination on the matter referred. A WIPO determination is binding, unless the parties agreed otherwise.

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Mediation

• Non-binding procedure controlled by the parties

• Confidential procedure

• Interest-based procedure

(party-to-party communication)

• High success rate; low risk

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Mediation Process

Commencement

Appointment of Mediator

Initial Conference

Meetings

Conclusion

Request for Mediation (Art 3-5); Fees Art 21)

Role of the mediator (Art 13); Appointment (Art 6-7)

Conduct of the mediation (Art 9-12)

Set up the first meeting; Agree on preliminary exchange of document, if any

Agree on ground rules of the process; Gather information and identify issues; Explore the interests of the parties; Develop options for settlement; Evaluate options

80% success; costs USD 6,000-60,000; duration 1-7months

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WIPO Mediation Example

• Patent infringement dispute

R&D company holding patents disclosed patented invention to manufacturer during consulting contract

No transfer or license of patent rights

Manufacturer started selling products which R&D company alleged included patented invention

Negotiation patent license failed

Parallel infringement proceedings in several jurisdictions?

• Parties submitted to WIPO Mediation

Outcome: agreed license and new consulting contracts

Total duration: 4 months

Mediator’s fees: USD 24,000

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Arbitration

• Consensual & flexible procedure: choice of arbitrator(s)

• Party autonomy

• Neutral

• Confidential

• Efficient

• Interim Measures (WIPO Rules, Art. 46)

• Experts (WIPO Rules, Art. 48, Art. 55)

• Remedies (damages, performance, injunctions, declaratory relief, costs, etc.)

• Final Award

• Award enforceable

New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (142 States have ratified)

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Final Award (3 months)

Closure of Proceedings

Hearings

Further Written Statements and Witness Statements

Statement of Defense (30 days)

Statement of Claim (30 days)

Appointment of Arbitrator(s)

Answer to Request for Arbitration (30 days)

Request for Arbitration

WIPO Arbitration

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WIPO Arbitration Example 1

• License agreement between European software developer and Japanese media company

Platform for sale and licensing of mobile payment service in Japan

WIPO Arbitration: one arbitrator, place of arbitration Geneva

• Request for Arbitration filed by Japanese party:

Alleged breach of license: failure to provide technical service and support

Claim for damages: +USD 2 million

• Interim measures: bank guarantee

• Conciliation conference suggested by arbitrator

• Settled

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WIPO Arbitration Example 2

• US university registers TM for email system in US, Canada, etc.

• CN IT manufacturer registers TM for computer products in 16 countries

• Opposition proceedings & litigation for 6 years

• TM coexistence agreement; WIPO arbitration clause

• US university’s TM application in CN refused, requests CN manufacturer’s collaboration

• Request for specific performance (proxy registration & license); sole arbitrator

• Interim award (specific performance)

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Final Award (1 month)


Hearing (maximum 3 days)

Appointment of Arbitrator

Answer to Request for Arbitrationand Statement of Defense (20 days)

Request for Arbitrationand Statement of Claim

Final Award (3 months)


Hearings

Further Written Statements and Witness Statements

Statement of Defense (30 days)

Statement of Claim (30 days)

Appointment of Arbitrator(s)

Answer to Request for Arbitration (30 days)

Request for Arbitration

WIPO Arbitration WIPO Expedited Arbitration

One exchange of pleadings ; Shorter time limits; Sole arbitrator; Shorter hearings; Fixed arbitrators fees

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WIPO Expedited Arbitration Examples

• Financing Agreement Both parties see urgency and agree on short deadlines Only one issue in dispute One-day hearing Final Award: 5 weeks Arbitrator’s fees: USD 20,000

• Exclusive Patent License Dispute involving 1 European and 5 US patents US party rejected Asian party (inventor)’s claim that its products embodies

technologies covered by licensed patents and refused to pay royalties Complex legal and technical issues (infringement, validity, enforceability,

contract defense) Business secrets, models, site visits (protective orders) 12 procedural orders, 2 preliminary awards eight-day hearing Final Award: 15 months

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Expert Determination

• Accommodate expeditious resolution of disputes between parties, concerning an issue of limited scope (e.g. royalty rate dispute) or clarification of certain technical or scientific issues by a neutral third party

• More informal, flexible and expeditious than arbitration

• Determination binding (unless parties agree otherwise)

• May be combined with other WIPO procedures

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Mediation, Arbitration and Expert Determination (1)

• Party control / autonomy / consensual

• Flexibility : “à la carte”

• Expertise

Party selection of neutrals; tailored appointment

• Neutral

Arbitrator/mediator/expert, language, law, venue

• Confidential

Existence, disclosures, result (WIPO Arb Rules Arts. 52, 73-76)

• Less adversarial than court litigation

Restore a working business relationship

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Mediation, Arbitration and Expert Determination (2)

• Single Procedure

Multi-jurisdictional disputes in one proceeding

No jurisdictional problems

Time & cost effective (WIPO Arb Rules, Art 38)

• Arbitration: finality / enforceability of awards

New York Convention

with limited exceptions (e.g. denial of due process), “automatic” enforcement of arbitral awards

142 signatories

Inter-partes effect

• Mediation: commercial solutions

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Routes to ADR

• Court Annexed (in particular mediation) e.g. US District Court for the District of Delaware

• Voluntary decision of the parties Submission Agreement

ADR Clause

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Drafting ADR Clauses

• Essential elements:

Type of ADR

Applicable rules

Location, language of ADR

Number of neutrals

Governing law, if arbitration

Place of arbitration: arbitration-friendly environment; modern arbitration act

• Use model clauses and modify only as necessary

• Combine options, including mediation

High settlement rate

• “Make it fit” (e.g. expedited arbitration)

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Recommended WIPO Mediation Clause “Any dispute (…) shall be submitted to mediation in accordance with WIPO Mediation Rules. The

place of mediation shall be […]. The language to be used in the mediation shall be […].”

Recommended WIPO Arbitration Clause “Any dispute, (…) shall be referred to and finally determined by arbitration in accordance with

the WIPO Arbitration Rules. The arbitral tribunal shall consist of [three arbitrators][a sole arbitrator]. The place of arbitration shall be […]. The language to be used in the arbitral proceedings shall be […]. The dispute, controversy or claim shall be decided in accordance

with the law of […].”

(http://www.wipo.int/amc/en/arbitration/contract-clauses/clauses.html)

Recommended WIPO Expert Determination Clause

Any dispute (…) shall be referred to expert determination in accordance with the WIPO Expert Determination Rules. The determination made by the expert shall [not] be binding upon the

parties. The language to be used in the expert determination shall be […].

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WIPO Center: ADR Options

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Combined ProceduresCombining the Benefits

• Mediation followed by Arbitration

• Mediation followed by Expert Determination

• Expert determination followed by Arbitration

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WIPO Arbitration and Mediation Case Experience (1)

• 70+ mediations

• 100+ arbitrations

• Parties from 18 countries (domestic & international)

Austria, Canada, China, Denmark, Finland, France, Germany, Ireland, Israel, Italy, Japan, the Netherlands, Panama, Romania, Spain, Switzerland, UK, USA, etc.

• Place of Arbitration

France, Germany, the Netherlands, Switzerland, USA

• Procedures

English, French, German, Italian

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WIPO Arbitration and Mediation Case Experience (2)

• Subject matter:

Contractual: patent licenses (inc. standard-related), pharmaceutical distribution agreements, R&D, joint ventures, software/IT, copyright collecting societies, trademark coexistence agreements, art marketing, other commercial relationships (construction, finance, employment).

Patent infringement

• High success rate

• Value in dispute: USD 20,000 – USD 600 million

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http://www.wipo.int/amc/en/center/caseload.html

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Role of the WIPO Center as an Administering Authority (1)

• Administered vs. Ad Hoc?

Hard to agree on procedure once dispute arisen; do you know suitable neutrals; which administering institution (do not combine)

• List of neutrals (arbitrators, mediators, experts)

Over 1,000 mediators, arbitrators, experts

70 nationalities

Broad range of ADR, IP, and technical backgrounds

• Rules with IPR orientation

Mediation, (Expedited) Arbitration, Expert Determination

e.g. WIPO Arb Rules Arts 48-52: special rules on experiments, site visits, agreed primers and models, trade secrets and confidential information, protective orders, confidentiality advisor

• Model contract clauses

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Role of the WIPO Center as an Administering Authority (2)

• Competitive fees

• Efficient and cost-effective case administration

Establishment of the Tribunal, challenges, support in appointment of experts, management of fees and costs

• Hearing facilities

Free of charge in Geneva and Singapore

• WIPO Electronic Case Facility (ECAF)

• International, institutional knowledge, guidance, supervision

• Design and operation of procedures for special categories of IP disputes (UDRP)

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WIPO Schedule of Fees

Amount in dispute

Expedited Arbitration

Arbitration

Registration Fee Any Amount $1'000 $2'000Administration Fee *

Up to $2.5 M $1'000 $2'000

Over $2.5 M and up to $10 M

$5'000 $10'000

Over $10 M $ 5,000+0.05% of amount

over $10 M up to a maximum fee of

$15,000

$10,000+0.05% of amount over $10 M up to a

maximum fee of $25,000

Arbitrator(s) Fees * Up to $2.5 M $20,000(fixed fee)

Over $2.5 M and up to $10 M

$40,000(fixed fee)

Over $10 M As agreed by the Center in

consultation with the parties and the arbitrator

As agreed by the Center in

consultation with the parties and the

arbitrator(s)

Indicative rate(s)$ 300 to $ 600 per

hour

(All amounts are in United States dollars)

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WIPO Electronic Case Facility (ECAF)

• Available for arb / med cases under WIPO Rules

Certain exceptions: America’s Cup Jury Procedure

• Main features

Web-based electronic docket

Facilitation of party / neutral case management

Easy, instant, location-independent, secure

• User Information

http://www.wipo.int/amc/en/ecaf

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Role of the WIPO Center as a Resource Center

• IP ADR guidance

• Publications

• Workshops, conferences (upcoming events)

WIPO Workshop for Mediators in Intellectual Property Disputes, May 26-27, 2008

WIPO Advanced Workshop for Mediators in Intellectual Property Disputes, May 29-30, 2008

WIPO Arbitration Workshop, October 21-22, 2008

WIPO Advanced Workshop on Domain Name Dispute Resolution, October 23-24, 2008

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WIPO Center Domain Name Case Experience (1)

• Over 28,000 domain name cases

• Mostly under WIPO-initiated Uniform Domain Name Dispute Resolution Policy (UDRP)

• Over 50 national domains (ccTLDs)

• Examples

columbiapictures.com, dreamworks-china.com, emiwarnermusic.com, espn.com.au, ifpi.com, elpais.com, 産経新聞 .com, jkrowling.ir, mariovargasllosa.org, microsoft.org

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WIPO Center Domain Name Case Experience (2)

UDRP .info Sunrise .biz STOP .name ERDRP .mobi Sunrise.mobi Premium

NamesTotal

1999+2000 1'858 - - - - - 1'858

2001 1'557 1'579 53 - - - 3'189

2002 1'207 13'593 285 1 - - 15'086

2003 1'100 - - - - - 1'100

2004 1'176 - - 3 - - 1'179

2005 1'456 - - 1 - - 1'457

2006 1'824 - - 1 18 105 1'948

2007 2'156 - - 1 - - 2'157

Jan-Feb 2008 355 - - - - - 355

Total 12'689 15'172 338 7 18 105 28'329

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Information

• Website: http://www.wipo.int/amc

• Emails: [email protected]

[email protected]

• Mailing list: http://arbiter.wipo.int/subscribe

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