Mediation of Patent Disputes—Part 1 of 3

In recent years, mediation has been used with increasing frequency by parties to patent disputes for good reason. Mediation has the potential to achieve a rapid resolution of the matter upon terms mutually agreeable to the parties.

Mediation is an extra-judicial process that has been described as an assisted negotiation. It is a voluntary process in which parties to a dispute seek to resolve their differences with the aid of a neutral, disinterested third party (a mediator), who facilitates discussions by attempting to focus discussions on the underlying interests of the parties. In the course of the mediation, the parties are encouraged to explore options of their own creation that address their respective interests. The mediator neither advocates on behalf of either party nor seeks to impose a resolution. Moreover, the mediator has no power to render a decision with respect to the matter. The parties are solely responsible for the terms of any settlement reached through mediation. Mediation and arbitration are sometimes confused; however, they are different forms of dispute resolution. In arbitration, a disinterested party (arbitrator) functions like a judge, and the arbitrator, not the parties, determines how the matter is to be resolved.

Mediation is attractive because, if a resolution is reached, the parties avoid prolonged uncertainty of outcome. In a circumstance in which a party is willing to consider mediation of the dispute, a question arises as to when mediation should be pursued. If pursued shortly after the filing of a patent lawsuit, a party may be of the view that there has been insufficient discovery to evaluate the merits of the case. If delayed well into discovery, the parties will have incurred substantial litigation costs. When successful, mediation can produce a resolution in days or months, and at far less cost than a resolution through the courts.

Although mediation has proven to be an effective process for resolving patent disputes, as mediation is a voluntary process, a settlement will be obtained only if the parties find common ground. If a patent owner initially demands that an accused infringer cease the manufacture and sale of an accused product, and the accused infringer refuses to accede to this demand, it would seem that resolution of the matter through mediation would be difficult to achieve. In practice, however, the initial demands are simply viewed as the starting positions, and efforts are made to determine if there is a basis for the parties to bridge what may initially appear as irreconcilable differences.

In this series, we will seek to demystify the mediation process, while addressing some of the unique considerations involved in patent disputes. The next segment will consider reasons why parties to a patent dispute may prefer mediation as a dispute resolution alternative to litigation. In the final segment, we will consider how parties may arrive at mediation and generally discuss the mediation process.