In a recent international survey of over 350 respondents from 62 countries, licence agreements (especially those concerning patents) are the main culprits in terms of giving rise to disputes.
The World Intellectual Property Organisation (WIPO) surveyed 350 businesses from 62 countries in industries such as IT, consumer goods and biotechnology. While respondents said they saw a trend towards resolving disputes out of court (29% said they tried mediation before going to court), the two most common methods to resolve disputes were litigation in the respondent's home country, or litigation in another country. Arbitration came a distant third.
Respondents said the main considerations when negotiating dispute resolution clauses were costs, time, enforceability, quality of outcome (including expertise of the decision-maker), neutral forum and confidentiality.
So let's do a side by side comparison of litigation and arbitration:
| Litigation | Arbitration | |
| Costs | Very expensive | Not cheap, but cheaper than litigation |
| Time | Often many years, plus appeals | A bit over a year (and generally no appeals) |
| Enforceability | Difficult to enforce if parties are in different countries | Internationally recognised and enforceable across jurisdictions |
| Quality of outcome | Judges not experts in the particular IT/ IP field | Greater access to arbitrators with specific expertise |
| Neutral Forum | In some jurisdictions the impartiality of judges is not a given | Neutrality guaranteed |
| Confidentiality | Judgments are publicly available | Proceedings and results are confidential |
So why is it that parties choose to resolve their disputes by litigation?
To us it's a no brainer. Perhaps it's time to reconsider the dispute resolution clauses in your IT/IP contracts.
We do not disclaim anything about this article. We're quite proud of it really.
