Manny Pokotilow of Caesar Rivise and ADR Options.

What a substantially long career in intellectual property (IP) has shown me about IP controversies is that when you get into court with any IP controversy, it becomes very expensive for the client. The 2019 AIPLA Report of the Economic Survey shows that the range of costs for a patent infringement suit with $10 million to $25 million at risk, cost in a range of $2 to $9 million with a median cost of approximately $4 million. However, mediation cost less than $100,000 per case on average. For trademark, copyright and trade secret litigation with the same amount of money at risk, the range of litigation costs are not substantially lower. When IP litigation starts, the costs go up almost immediately upon the service of discovery. That is also when the grief begins for your clients. That is why I recommended to all of my clients that we try to settle matters as soon as possible. Not only is the cost of litigation reduced, speed and ease of resolution are enhanced. These are very important factors why mediation should be your preferred method of dispute resolution. This article explores the factors that make mediation, and sometimes mediation in combination with arbitration, a good alternative to IP litigation and shows you how to get to the end of your client's dispute.

Shortcomings of IP Litigation

In addition to the high expense of IP litigation, there are various factors that make the expense of the litigation go up higher than expected and cause continuing dismay for the parties. For example, delays in the scheduling of a case caused by having your assigned judge having to sit on criminal cases and, in particular, long trials. Cases in which the trial judge is unable to give you a date certain for trying a case and putting you on a calendar list for the start of trial. That factor is always complicated by your list of witnesses, who are highly paid, very busy professionals. In addition, the perceived facts for many of the factors which are used for determining patent, trademark or copyright infringement are often subject to change during the course of discovery and during the course of preparation for trial. Facts and perceptions of not only your case, but that of the opposing party, can change, not only during the course of discovery, but also during trial, witnesses can perform in an unexpected manner. Added discovery may change the length of the lawsuit, the manner in which it is tried and can also change the costs and risks of litigation. Discovery and trial preparation often take a client away from the running of a business from which he/she cannot be spared.

It often seems to the parties that justice is not achieved when IP litigation is completed. In substantially all patent, trademark and copyright infringement suits, the reason the suit was brought by the plaintiff was to stop infringement. If an injunction is not granted to stop the infringement, which often happens, no matter the damages granted, the amount seems inadequate to the plaintiff. Sometimes the attorney fees paid are more than the award. For a victorious defendant a win is hardly a victory when the cost of defense exceeds what the plaintiff sought initially.

Why Mediation?

"Mediation focuses on the parties' interests to resolve the dispute, rather than declare a winner," according to Kevin M. Lemley, "I'll make him an offer he can't refuse: A Proposed Model for Alternate Dispute Resolution in Intellectual Property Disputes," 37 Akron L.Rev. 287, 306.

That is, mediation is a form of settlement negotiations between the parties that uses a mediator to facilitate the negotiations between a combination of the attorneys and the parties present.  The results need not be binary, i.e., win or lose.

The mediator is preferably a person with good facilitative skills. When I look for a mediator, I prefer that the mediator has good mediation skills and preferably experience with the type of litigation involved. When mediating intellectual property cases with these credentials the mediator should be able to settle over 80% of the IP litigation when all parties enter mediation voluntarily. The reason is that the mediator can lead the parties to solutions that are not just agreeing on the amount of the damages that will be paid. Or, agreeing that one side will agree to stop using the intellectual property of the other. It can, for example, lead to one side licensing the other. The parties can agree to geographical limitations.

The process of mediation normally begins with the parties agreeing to meet with the mediator, exchange confidential mediation statements and then sitting down at a mediation conference where each party has an opportunity to present its side of the case. The people attending a mediation conference are the parties, or a representative with the authority to settle the case, their respective counsel and the mediator. The mediator often permits each party or its counsel to explain the case from its perspective to the mediator and the other party. Upon completion of the presentations, the mediator meets with each party separately, to determine on a confidential basis, what each party hopes to get. When an experienced mediator determines what each party is seeking from the litigation, the mediator most often is able to guide the parties toward a solution that each party finds better than if they were to take a chance with a trial.

Finally, even when the parties cannot agree to a final resolution of IP litigation, a mediator can be useful in helping the parties resolve many of the disputes between the parties. If the parties are relatively close in settling the matter through mediation, except for one or more issue, the parties can settle with an agreement to have a limited arbitration on the one issue and having the arbitration heard within a short period of time. With the resolving of that one issue by arbitration it can wrap up a settlement.

Getting the Parties to Mediation

The earlier you can get the parties to mediation, the more that can be saved by the parties. Too often parties wait for discovery to be half over before either party will consider settlement. Because of the facilitative nature of mediation that enhances settlement I recommend that it be considered before even sending a cease and desist letter. There is nothing better than to call opposing counsel and suggest mediation. This can be done at the time your client is charged with infringement or prior to your filing a complaint. There is normally a reluctance of attorneys to call an opposing party because of the fear by either the attorney or the client that it be seen as a sign of weakness. But, as I have said to many a client, what does it matter? It does not mean your client is giving anything away. The other attorney can say no or get the other party to agree. If you are afraid opposing counsel will not tell her client you suggested mediation, suggest to your client that she call the opposing party directly and suggest mediation. If your client does it early or later in the case, it can lead to a favorable settlement. Everyone comes out a winner with a prompt settlement. Finally, what practicing a long time has shown me is that I have kept many clients for a long time because I kept them out of litigation with the above practices.

Manny Pokotilow is senior counsel with Caesar Rivise. He is also a mediator and arbitrator with ADR Options having successfully resolved over 50 disputes in highly complex matters in all areas of intellectual property  His practice of over 40 years has consisted of all aspects of intellectual property law, particularly litigation, involving the enforcement of patents, trademarks, copyrights and trade secrets.