Intellectual Property Office relaunches mediation service

Arnold & Porter (UK) partner Christopher Stothers says the relaunch of the IP Office mediation service should be welcomed by IP rich industries.

Christopher Stothers
Christopher Stothers

The re-launch of the Intellectual Property Office (IPO) mediation service today should be applauded by the IP-rich industries. Although the TMT sector has not always been open to mediating, IP disputes are in many cases extremely well suited to mediation.

For example, the best settlement for an IP dispute is often in the form of a cross licensing agreement. Such a commercial solution means both parties effectively agreeing to compete in the market rather than in court. An independent third-party mediator will explore whether such a deal can be done, whereas the courts can rarely reach this outcome.

Similarly, IP disputes frequently give rise to an ‘all or nothing’ situation, in which the inevitable outcome seems to be either that one party’s product will be taken off the market or the other party will lose their IP. Although no ‘middle ground’ may be obvious, mediation is well placed to encourage a reasonable commercial solution which removes risk on both sides, rather than forcing both parties to gamble everything by going to court.

The IP disputes best suited to mediation are particularly those where a commercial possibility might be missed in the court process.

It is of course a very good option for small companies with limited resources to invest in litigation, which will be the focus of the IPO service, but is also well worth considering by the legal teams at major corporates struggling to reduce litigation budgets and find more profitable areas for investment.

Many IP disputes should be resolvable by mediation, in whole or at least in part. Even if they can’t be resolved completely, a mediation will often bring the parties closer. So why don’t people do it more?

Many CEOs or business leaders in IP rich industries feel more comfortable being in a position of strength.

In the world of litigation, where temperatures can run high, it can be difficult to create an environment where posturing is decreased and an element of trust is increased.

This brings us to both the main strength, and the main weakness, of mediation, which is that it will not succeed without some candour, a degree of trust, and above all a desire by both parties to engage in the process to find a solution.

In this light, a common concern is that, if you suggest mediation, you will suffer because the other side will then refuse to contemplate a resolution that is anything short of you giving up.

The fear is that proposing mediation will encourages the other side to become more aggressive, rather than less – after all, why would you suggest mediation if you did not feel weak?

This is an understandable concern, and I don’t believe you can ever eliminate the possibility of this type of outcome. That said, this is not a reason to shun mediation. The risk can be greatly reduced if the clients’ advisers are able to communicate with each other, not just about the litigation itself, but also about the fact that one of their responsibilities is to explore ways in which the parties might resolve their dispute without forcing the court to determine the issues.

In addition, the objective of mediation then needs to be communicated to those who will participate in the mediation itself.

A critic would say that mediation is an additional unnecessary expense; it just delays the inevitable litigation or settlement discussions; it is a waste of time and money if the case does not settle; and for IP cases, where you either infringe a valid right or you don’t, it is simply a waste of time. I don’t think any of these points survive much analysis.

At worst, they can be put forward by an adviser who does not have the skills, or does not want, to see a dispute resolved in this way.

There are plenty of statistics available about mediation, and he World Intellectual Property Organization (WIPO) publishes statistics on a regular basis.

What is clear is that a high proportion (perhaps 70-80per cent) of mediations produce a settlement. For a huge number of disputes – many more than you might think – mediation is head and shoulders above litigation or arbitration as a cost-effective way to resolve disputes.

Even if it may not work in every case, it should not be ignored or considered as a sign of weakness.

The IPO is not alone in its efforts – there are many organisations that offer mediation services – but the IPO is spreading the word that we should all try mediation.

This comes from an organisation which is often the first port of call for SMEs who need to understand the basics of an IP issue, in simple, direct, unbiased and easy to understand language. Its decision to offer a mediation service is to be greatly welcomed.

Christopher Stothers is a partner in the London office of Arnold & Porter (UK).