A recent WIPO
Survey assessed the use of alternative
dispute resolution (ADR) clauses in various technology
transactions, and the results make for interesting reading for
anyone who is in the business of negotiating technology deals. The
goal of the survey was to establish trends in the use of ADR to
handle technology-related disputes, and almost 400 participants
from 62 different countries participated. A few takeaways:
Overall, the use of ADR clauses appears to be on the
increase, as compared to the use of litigation in court.
Almost all of the respondents (94%) indicated that dispute
resolution clauses are the subject of contract negotiations.
In other words, negotiators are paying attention to these clauses,
and not merely defaulting to the clause that is proposed by the
other side, or comes with the precedent agreement.
Respondents were asked to estimate the percentage of their
technology-related agreements that led to disputes. The
License Agreements (25% of Respondents)
R&D Agreements (18% )
NDAs (Non-Disclosure Agreements) (16%)
Settlement Agreements (15%)
Assignments (13%), and
M&A Agreements (13%).
The most common dispute resolution clauses according to
Court litigation (32%)
Multi-tier clauses (17% of all clauses) in which mediation is
deployed prior to court litigation, arbitration or expert
Regarding time and cost, the estimates of respondents were as
follows, and remember there are averages, and most would involve
patent international disputes:
Court litigation (home jurisdiction) took approximately 3
years; and amounted on average to US$475,000
Court litigation (foreign jurisdiction) took on average 3.5
years; and amounted to US$850,000.
Arbitration was shorter, at 1 year; the cost added to
Mediation was shortest, at 8 months, and 91% of Respondents
indicated that mediation costs were under US$100,000.
Interestingly, 25% of respondents indicated that
“management time of business executives and wasted time of
other participants in proceedings, lost productivity and lost
business opportunities” represented important factors when
assessing the costs of dispute resolution.
A recent Saskatchewan Court of Queen's Bench decision allowed a court-appointed receiver to sell and transfer intellectual property rights free and clear of encumbrances, finding that a license to use improvements of an invention was a contractual interest and not a property interest.
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