Resolving international intellectual property disputes through alternative dispute resolution

Intellectual property (IP) is, by its very nature, global¹ in a way that other forms of property are not.  Information, the subject matter of IP, is instantaneously transmissible.  IP is non-exclusive, such that multiple persons can enjoy its application at the same time.  This is its greatest strength and its greatest weakness.  It is a strength in that IP can be exploited by its owner globally; a weakness in that it can be exploited by persons other than the owner, without permission, more conveniently than any other form of property.

The global nature of IP is fertile ground for the germination of global disputes.  This article considers a method of dispute resolution particularly suited to international disputes that all owners of IP should be aware of: alternative dispute resolution (ADR).

What is ADR?

ADR refers to processes of legal dispute resolution other than the usual courtroom litigation.²  ADR is not truly an “alternative” means of dispute resolution, in that it is not incompatible, or in competition with, the established judicial system.  Rather, ADR provides an additional range of dispute resolution mechanisms.³  ADR processes include, amongst other things, negotiation, mediation, expert determination and arbitration.  The following ADR processes are particularly relevant to the resolution of IP disputes:

• Negotiation in the ADR context has the same meaning as in any other.  Essentially it is a process of communication directed towards joint decision-making.⁴  Negotiation of legal disputes can occur through lawyers or the parties themselves.

• Mediation is different in that the process is facilitated by an independent person, the mediator.  The mediator can assist parties in isolating the issues at the heart of a commercial dispute,⁵ with a view to the parties reaching a settlement.

• Expert determination involves referring the matter to a third person, an expert in the area, for expert opinion, appraisal, valuation or determination to settle a dispute.⁶  The determination is usually binding on the parties, not unlike a court decision.

• Arbitration is a means of dispute resolution that already plays a significant role in the resolution of international commercial disputes.⁷  An arbitration is a proceeding in a private tribunal, convened by the agreement of the parties.  Arbitrations are governed by rules, analogous to a court proceeding.  The United Nations has a set of rules, the UNCITRAL Model Law, which applies to many arbitrations around the world.  As of August 2013, that Model Law will apply to arbitrations in Western Australia.⁸  The determination of an arbitrator, an “award”, binds the parties.

Advantages of ADR for IP disputes

Any party to a commercial dispute, let alone an IP dispute, should consider ADR for two reasons: time and money.  ADR processes are cheaper and faster than litigating in Australia or overseas.⁹  Further, they are particularly well suited to the resolution of IP disputes:¹⁰

• ADR is well suited to international disputes and avoids many of the conflict of laws issues of cross-border litigation.

• The technical and specialised nature of IP disputes lends itself to engaging experts, to mediate, make a determination or arbitrate.

• The short product and market cycles of IP favour resolution of disputes very quickly.

• ADR processes are confidential.

• ADR allows for the preservation of commercial relationships which suits the collaborative nature of the creation and commercialisation of IP.

Planning for ADR

In many cases the availability of ADR presupposes an ongoing business relationship.¹¹  For example, parties would enter into arbitration as a result of the operation of a dispute resolution clause in a contract.  Contracting parties should anticipate disputes and contract accordingly.  Similarly, if the business relationship is an international one, parties should anticipate the challenges of an international dispute.

The World Intellectual Property Organisation (WIPO) has drafted a variety of ADR clauses specifically designed for incorporation into international contracts concerning IP.  The clauses are offered to businesses free of charge, and are available here.  The clauses are found most frequently in licensing agreements entered into by parties from different jurisdictions, but would suit a wide variety of contracts concerning IP.¹²  Lavan Legal recommends considering inclusion of these clauses in any agreement concerning IP.

In the event of an international IP dispute

If an international party is infringing your IP rights, your legal advisors should consider ADR as a means of solving the problem.  Even if there is no pre-existing relationship with the infringing party, ADR processes such as negotiation and mediation may provide a cost-effective means of achieving a timely resolution.  If you decide to pursue ADR in the course of an IP dispute, WIPO offers a variety of services at its Arbitration and Mediation Centre that may be of assistance.¹³  These include the services of experts in technology and IP who can assist in the resolution of disputes in a way that others cannot. 

Lavan Legal comment

Litigation is often the avenue of first resort in IP disputes, and in many cases, rightfully so.  However, a prudent IP lawyer, with his or her client’s time and money at the front of his or her mind, should always consider whether ADR could better achieve the client’s commercial objectives.