The press is often filled with stories of high-profile IP
litigation, but it is rare to hear of IP cases that have been
through alternative means of dispute resolution (ADR) such as
arbitration or mediation. This is for good reason – most ADR
is completely confidential. ADR can be used in almost any legal
dispute at any stage of a dispute – in fact, UK litigants
have a positive obligation to consider whether ADR would be more
suitable for resolution of the dispute than proceeding through the
courts. But how and when should it be used in IP matters?
For the uninitiated, parties who engage in ADR choose one or
more basic forms. Arbitration is where the parties agree to be
bound by the decision of an arbitrator, typically a retired judge
or other person with legal and/or technical expertise. It is
"trial-like" in the sense that the parties agree a set of
procedural rules, but with greater flexibility compared to court
litigation, and the arbitrator presides over the final hearing.
Mediation is where parties agree to use a third party mediator,
again typically a legally qualified person, to help guide the
discussion towards settlement. Unlike an arbitrator, the mediator
cannot bind the parties. Often mediation is called for when the
parties cannot settle the matter themselves, or where the parties
are contractually obligated to engage in mediation to resolve any
Arbitration has many advantages. The proceedings are
confidential and the parties get a degree of choice over the
arbitrator to hear the case. Where matters are
cross-jurisdictional, a single award can render the matter final
globally all at once, alleviating the need to utilise the courts of
each jurisdiction, saving complexity, time and cost.
The majority of IP arbitrations are contractual in nature
(upwards of 75 per cent according to WIPO), but infringement and
validity matters are often heard. Although arbitrators have no
power to invalidate an IP right, parties can agree that the IP
right becomes unenforceable against the other party, but what this
means in practice for the IP right-holder will vary depending on
the award and the ground rules agreed by the parties at the outset.
National laws may also limit the scope of an arbitral award
concerning the validity or infringement of a registered IP
Likewise, mediation has many advantages – it can bring
parties to the table where there was no hope previously. Like
arbitration, mediation is confidential. As it is a negotiation,
instead of a trial, the parties can walk away if they do not like
the deal. Of course, this is balanced with the possibility of
spending time and cost on a facilitated negotiation that might
ultimately fail, but the majority of parties go into mediation with
a prospect that a deal will be made.
Disputes are often far from people's minds in the sunny
period leading up to an agreement, but the dispute resolution
clause should not be overlooked. A careful consideration of
mediation, arbitration and other ADR procedures at the time of
contracting could be a way of avoiding costly and uncertain
litigation down the road.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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