How mediation of patent disputes differs from litigation

Mediation is a well-accepted means of dispute resolution and an alternative to litigation

Patent litigation can be extremely expensive and time consuming. A patent infringement case of even moderate complexity can cost millions of dollars. At the same time, a protracted litigation can damage a company’s business development strategies while important intellectual property rights are expiring.

The outcome of patent litigation is always uncertain. This uncertainty is in part due to the nature of the decision makers. Federal judges do not generally have particular expertise in patents or the technologies covered by patents. Patent cases are triable to a jury. Juries are lay people called upon to decide a complex matter. These factors add to the uncertainty of the outcome of patent litigation.

For these reasons, it is often desirable to seek an alternative to the litigation process. Mediation is a well-accepted means of dispute resolution and an alternative to litigation. The mediation process involves the parties to a dispute engaging an impartial mediator to facilitate a negotiation process. This process differs from litigation in several respects.

Unlike litigation, the mediation process is confidential. Therefore, the parties are more able to explore options and exchange information than is possible in a patent litigation setting. At the same time, the parties may provide information to the mediator in confidence. The proceedings and conduct of mediation itself is confidential and not admissible into evidence in the court proceeding. It is also possible for the parties to enter into agreements to protect important proprietary technical information.

The process is informal and can be easily tailored to the needs of the parties. During the mediation process the parties can meet jointly with the mediator or they can meet individually with the mediator. While it is preferred that a resolution be negotiated in a single session, this is not always possible. Thus, mediation can continue by telephone or in additional in-person sessions as long as the parties are willing to participate. This provides flexibility and allows the parities to conduct additional investigation or develop additional facts as needed to resolve the dispute.

Importantly, mediation brings together all of the parties and the attorneys. This is a unique occurrence during the litigation process. During the litigation process all of the parties will rarely, if ever, be brought together, short of the trial itself. When a mediation is conducted, the parties and attorneys have come together for a specific purpose of developing a resolution of the dispute. Thus, the mediation process tends to gain a momentum not experienced otherwise during the litigation.

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In mediation more options are available to reach a resolution. Generally a court has a limited number of ways to make an award to the parties. These generally include money damages and injunctive relief. In mediation it is possible for the parties to explore other means of settlement. For example in patent licensing and infringement actions, it is possible to explore mergers, cross-licensing, assignments of technology and royalty rate negotiations, all of which may be beyond the scope of a possible judicial award.

Parties need to carefully consider when in the litigation process to undertake a mediation. It is likely useful for the litigation to be fully underway and all parties to be named in the case before there is an attempt to mediate. Issues such as patent infringement and validity should be sufficiently developed to allow the parties to evaluate the case. This generally requires that some discovery be conducted prior to the mediation. Thus, it may not be productive to mediate extremely early in the patent litigation process.

At the same time, it may also be important not to wait too long before conducting mediation. If issues of patent infringement, validity, and damages are fully developed and the parties are ready for trial there may be an attitude that the parties are just as well off going ahead with the trial rather than mediating.

Another issue relates to the role of the mediator in a patent case. One benefit of mediation is that the parties can chose a mediator that has expertise in the legal and technical areas being litigated. In a patent case, the mediator may be an experienced patent attorney with specific technical expertise in the area being litigated.  The mediator can use this expertise to engage the parties in ways that are not possible by a lay judge. The mediator is in a position to challenge some of the entrenched positions of the parties whether on legal issues or on issues involving the technology. Since this may be done one-on-one with the mediator it is possible for the parties to acknowledge a weakness in their position without losing face with the other party. All of these tools and strategies can facilitate resolution of the patent case.

Thus mediation in patent cases can provide the parties with an attractive alternative to litigation.

Contributing Author

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Craig Metcalf

Craig Metcalf is a Shareholder with Kirton McConkie. His practice emphasizes intellectual property and appeals as well as mediation and arbitration. He can be reached...

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