Why Mediate Intellectual Property Disputes?

Chief Justice Warren Burger admonished the ABA in 1984, “Our litigation system is too costly, too painful, too destructive, too ineffective for a civilized people.” The Chief added, “For many claims trials by the adversarial contest must in time go the way of the ancient trial by battle and blood.” Copyright trademark and trade secret trials may be among the most expensive legal contests, and I am pretty sure the Chief would have recommended mediation.

The number of civil cases that reach trial in the federal courts is a very small percentage of the total cases filed; probably less than 5 percent. The road to settlement, however, can be long and very expensive. We can get these cases settled early on!

Trademark, copyright, and trade secret cases can be hard rows to hoe, often because of complicated subject matter, speculative damages, and because many of the issues are factual and disputed, and the trier of fact will want to hear live testimony at trial and weigh that evidence. Discovery is very often protracted and expensive. Appeals usually follow verdicts or awards. In the end, the parties are often unhappy with the result and the cost. This does not have to be the way.

Mediation lends itself to copyright, trademark, and trade secret disputes and is a method to resolve cases without painful, lengthy, expensive, and protracted discovery and litigation. A mediated resolution will occur long before a trial date is had and the appeals are resolved. It puts resolution into the parties’ hands when they are ready to compromise. Mediation avoids an overburdened judiciary and a backlog of cases. Mediation avoids a judiciary that may have no real substantive knowledge of the law governing the dispute. The parties can inject into the mix a mediator with IP background who is capable of helping the parties achieve a creative, maybe even unique, resolution.

The timing of mediation can be critical and should be considered early on before the parties have become set in their ways and their positions frozen. Or before they have spent so much money they feel they no longer can settle. Even if the perceived harm is ongoing, the parties can mediate having filed their complaint. A private mediator can often act quickly.

Mediation of copyright, trademark and trade secret cases allow the parties to pick a neutral who has substantive legal expertise and mediation training and skill. A mediator versed in IP can ask pointed questions, help the parties review the facts, help the parties assess their case and help them achieve settlement. Mediation should be considered long before costly deadlines approach.

Mediation is about resolution through compromise, it involves give and take on both sides. No one who agrees to participate in mediation should expect to walk away with all the marbles; they should not think, “Be reasonable. Do it my way!”

A mediator who really knows the ins and outs of IP can help the parties define and consider the various rights that exist in an IP fight and can help the parties divide those rights up among themselves, so that each gets what it needs, even if what it gets may not be all it wants. Creative resolutions the parties have not considered can be achieved. An all or nothing result that may be disastrous to the loser can be avoided, and often there are more issues between the parties than are dealt with by trial.

An IP mediator well-versed in the legal discipline at issue can also help the parties resolve their case by candidly addressing with each party the perceived weaknesses, including affirmative defenses that might not be top of mind at the moment, but will become key later in the case. For example, the unlawful use of a trademark on combinations of medicines not approved for that use by the FDA. The mediator must develop a relationship of confidence with counsel on all sides in order to develop a perspective and the trust that will lead to resolution. The mediator should help define what are the actual strengths and weaknesses of each party are; what resolutions are really needed; what remedies can be forgone?

Because discovery is often the most expensive phase of IP litigation, the parties, working through and with the mediator, could agree for purposes of mediation, without waiving rights should mediation not succeed, to limit the scope of discovery and to save many, many thousands of dollars without jeopardizing their results. And often the courts will agree to modify scheduling orders to accommodate mediation.

The mediation and the results are confidential, settle or not. Where the need for candid discussion reveals sensitive information this aspect of mediation may be crucial.

Finally, a key factor in mediation is that a party can leave the table at any time, and that of course, can be the impetuous that keeps all parties acting reasonably and working towards a settlement. While a creative mediator can help the parties to achieve their goals in ways a court has no power to do, for example, suggesting a license or modifications to existing license, no party is forced to agree to resolution; until agreement is reached on all material terms, the parties are not bound.

Mediation of copyright, trademark, and trade secret cases may not be everyone’s brand of beer, but compared to litigation the process is faster and less expensive; it’s confidential. The result will be more balanced when working with an experienced mediator who has substantive knowledge who can help the parties envision various paths and help them reach their destination (and sometimes, remain friends).

In the end, there is not much to lose by attempting mediation before launching into an expensive and protracted litigation. And, even if the first session fails to reach a resolution, the parties, after some time has elapsed, can agree to meet and mediate again. To quote a British judge, “The whole point of having mediation . . . is that the most difficult problems can sometimes be solved.”

Jim Astrachan is a partner at Goodell, DeVries, Leech & Dann,
LLP. He has been a mediator on the panel of neutrals maintained
by the International Trademark Association (INTA) and has mediated
IP and other cases for approximately 20 years. Since approximately
1997, he has taught IP courses in two Maryland law schools. See his
bio at: https://www.gdldlaw.com/attorneys/james-b-astrachan.


This article was originally published in The Barrister by the Bar Association of Baltimore City.