Success of your intellectual property (IP) portfolio includes determining the proper dispute resolution strategy for your business. While often necessary and sometimes the best option for a particular case, litigation can be breathtakingly expensive and full of risk. Planning ahead by developing a strategy now for dealing with disputes, whether to enforce your IP or defend against attacks from competitors or others, can save millions of dollars, and perhaps even your company.
A key piece of your planning should include options for Alternative Dispute Resolution (ADR). ADR in IP disputes is on the rise—although ADR before a lawsuit still makes up only a small portion of total disputes. The low representation of ADR is at least partially due to the fact that parties often fail to agree on terms for ADR with business partners, vendors, customers, and licensees, where many IP disputes begin. TraskBritt can help you strategically place ADR terms into your IP licenses and other agreements before there is a dispute between the parties.
The World Intellectual Property Organization (WIPO) has researched and continues to research why companies choose or decline IP ADR—the following are a few of the reasons companies choose ADR over traditional IP litigation (WIPO’s full survey on ADR results can be found here):
- Single procedure. With arbitration, parties can choose a simplified single procedure for the entire case. The parties do not need to worry about multiple jurisdictions. This can be especially important with international disputes.
- Party autonomy. The parties can choose the rules and are not bound by common law, which may not make sense for a given case.
- Neutrality. The parties can arrange a more neutral tribunal that avoids giving one party a home-court advantage.
- Expertise of arbiters. Oftentimes, each party will choose one arbiter and a third will be selected neutrally. This allows for the arbiters to have expertise in the specific topic, similar to common law trademarks.
- Confidentiality. This can be extremely important for tech companies that protect their IP via trade secrets. Litigation is public and published. Arbitration is private. This allows for more good-faith sharing of relevant information and protection of breaches after the fact.
- Finality. With litigation, there is little finality. An initial ruling can be appealed. With arbitration, the ruling is final and cannot be appealed, which is often good for your pocketbook.
Resolving IP disputes through ADR has been validated by the courts. It is grounded in the Federal Arbitration Act, and Title 35 of the USC provides for voluntary arbitration of IP disputes. Arbitration clauses are upheld in court.
Sample IP Alternative Dispute Resolution Clause
A sample ADR clause could look like this, though one would be tailored to your specific needs:
The parties agree that any dispute, controversy, or claim arising out of or relating to this contract or any alleged breach thereof shall be resolved in accordance with the following procedure:
Mediation. The parties will participate in a mediation conducted under the auspices of ____ in accordance with the Mediation Rules in a good faith effort to negotiate a resolution of the dispute.
Arbitration. If a resolution is not reached through mediated negotiations, the dispute will be submitted to final and binding arbitration conducted under the auspices of ____ and in accordance with _____ Arbitration Rules. Arbitration shall be required as of the time that the mediator gives written notice to the parties that it does not appear that the dispute will be resolved through mediation or, in the alternative, at the election of any party after thirty days have passed following the initial mediation session. This dispute resolution procedure shall be implemented by written notice given by any party to all other parties and to ____. The notice shall contain a statement of the nature of the dispute and the remedy sought.
TraskBritt is your dispute resolution strategy
TraskBritt frequently helps clients develop an IP ADR strategy and resolving disputes. We have highly experienced and nationally-recognized attorneys dedicated to helping clients through this difficult process, including by going to trial when necessary. Reach out to us directly and we will partner with you in all your dispute resolution needs.