Read our latest coverage of patent law and intellectual property issues, from Silicon Valley to the U.S. Supreme Court.
Also, the high cost of patent litigation might finally drive litigants to look for a cheaper venue, he said.
“It costs over half a million dollars to litigate one patent with expected damages of a million dollars or less, and there’s not even a guarantee you’d win,” Atkins said.
Ocean Tomo General Counsel Raymond Millien said costs will be a key factor in driving litigants into mediators’ offices.
“At the end of the day, I think they’ll see that this is a more efficient way of monetizing their IP assets than going to federal court,” Millien said, “where there is more than a 50 percent chance the ruling will be reversed on appeal and 97 percent that the case would not even go to trial.”
BLAZING THE TRAIL � SLOWLY
To be sure, mediation groups like JAMS and the National Arbitration Forum have been handling IP cases for at least a decade now. But it was only in recent years that the number of IP mediation and arbitration cases started picking up.
Both JAMS and NAF report a double-digit percentage increase in the number of IP cases they are handling in the past three years, though JAMS declined to be specific in the actual number of cases its mediators handled during that period.
NAF representative Curtis Brown said his group has been processing about 50 to 100 IP cases each year. In addition, the group had handled roughly 1,000 Internet-related trademark cases annually.
“It started slow but it is growing fast,” Brown said. “The market by and large suggests to us that they want this service and we really have mapped this out as being a growth area for us.”
Still, when it comes to high-stakes patent litigation, litigants still don’t trust ADR.
Although many federal courts are now mandating some form of ADR and mediation prior to trial, litigants are still filing patent suits in courts.
“Binding ADR, such as binding arbitration outside the courts and without the right to appeal, is best suited to a dispute between two manufacturers who have competing patent claims and are looking for a speedier, less expensive way to resolve the dispute,” said Chris Ottenweller, a patent litigation partner at Orrick, Herrington & Sutcliffe in Menlo Park.
Patent trolls, however, are a different matter. Many patent holding companies or licensing shops won’t agree to binding arbitration because they lose the threat of a large jury verdict and an injunction � weapons for forcing big settlements.
“There’s just no incentive for the plaintiffs not to take litigation,” said patent litigator Melvin Garner, a partner at New York IP firm Darby & Darby and president of the American Intellectual Property Law Association. “They can get more damages [in court] and are able to get much fuller discovery on the issue and they can really find out what the case is all about.”
THE RIGHT REFEREE
Another big drawback of mediation and arbitration is finding the right neutral.
“When I look for neutrals, I look for technical expertise and litigation experience,” Atkins said. “Where are you going to get these people? Many of them are busy doing patent litigation.”
Millien said that’s how his group plans to differentiate itself.
“The quality of our mediator will be different. We don’t have retired judges mediating IP cases,” Millien said. “We’re going to get IP trial lawyers who have mediated and litigated hundreds of cases to help us form our ADR team. Our mediators will have access to our deep bench of IP experts, who live, breathe and eat this stuff.”
The group also plans to introduce a specialized proceeding for patent cases, which includes provisions for appeal and claim construction hearings.
But so far, Ocean Tomo has only signed up three mediators, including seasoned patent attorney Kevin Casey in Chicago, who is a former General Electric engineer and Federal Circuit Court of Appeals law clerk.
But there are also doubts Ocean Tomo can sell itself as the ideal neutral, when the way it conducts its business � facilitating the sale of IP assets � is widely seen by some as aiding patent trolls in suing businesses.
“Many organizations with much more independence provide ADR services,” noted an IP attorney who declined to be identified.
Millien brushed off the criticism, saying that there is no other group that understands IP business more than Ocean Tomo. And some attorneys are actually intrigued by the new offering.
“This is a natural avenue for Ocean Tomo’s business,” Pooley said. “I don’t know of any other organization that approaches ADR from the starting point of an IP evaluation business. Assuming that Ocean Tomo manages to combine the IP and mediation skill sets, they should be successful in this initiative.”
